How JustAnswer Works:

Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.

Get a Professional Answer

Via email, text message, or notification as you wait on our site.Ask follow up questions if you need to.

100% Satisfaction Guarantee

Rate the answer you receive.

Ask Lev Your Own Question

Lev, Tax Advisor

Category: Tax

Satisfied Customers: 25438

Experience: Taxes, Immigration, Labor Relations

870116

Type Your Tax Question Here...

Lev is online now

A personal injury case was settled and the settlement agreement

Resolved Question:

A personal injury case was settled and the settlement agreement specifically stated that the money paid was due to physical injuries arising from an occurrence within the meaning of Section 104 (a)(2) of the IRS code. The agreement went on to state that none of the money paid was on account of lost wages, lost earnings, lost earning capacity, punitive damages, etc. The settlement was intended to be tax free. However, the injured person who received the settlement money was just recently sent a 1099. It appears the payer mistakenly (or improperly) notified the IRS in a manner which resulted in a taxable event. What steps can be taken to correct this? Is there an IRS form that can be submitted? Does the payer need to be notified to correct the error? Any suggestions would be most helpful. Thanks

LEV :Hi and welcome to Just Answer!The form 1099misc should not be issued in this case - and seems as was issued by mistake. The first step should be to contact the payer asking for correction. In most situations a simple phone call would solve the issue. If the payer does not cooperate - a certified letter should be mailed asking for correction.

LEV :If correction is not made within a reasonable period - the taxpayer may contact the IRS. The taxpayer will use correct amounts in his/her tax return and will attach a note with explanations (including what steps were made to correct the issue)See for reference instructions - page 5 - http://www.irs.gov/pub/irs-pdf/f1099msc.pdf Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. OrvilleHesperia, California

Ask a Tax Professional

Get a Professional Answer. 100% Satisfaction Guaranteed.

68 Tax Professionals are Online Now

Type Your Tax Question Here...

characters left:

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.